YB new stock pitches (Tue, Apr 1)

National Presto Industries (NPK), trading at less than 9x forward EPS compared to defense peers at 17-25x, is a hidden defense company masquerading as an appliance business. With 100% of profits coming from defense, NPK's backlog surge signals potential EPS growth from $4-6 to $11-16. The stock could see 2-3x upside at 15-19x P/E, reaching $170-$314 per share. Key catalysts include earnings growth, potential safety division resolution, and margin expansion. The company's low profile (no analyst coverage, earnings calls, or investor outreach) contributes to its mispricing. NPK's defense segment has diversified its business, winning new contracts beyond its traditional 40mm ammunition focus. The CEO, owning 24% of shares, has a strong track record of returning cash to shareholders, with potential for $40/share in dividends over the next three years. Risks include the money-losing safety segment and historically compressed defense margins due to investments.

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Logwin AG (TGHN.DE), a global logistics and transportation company providing tailored supply chain solutions, is controlled by Stefan Quandt (87% ownership stake), who also owns 27% of BMW. The company has demonstrated consistent financial performance with a 10-year revenue CAGR of 2.5% and an EBIT CAGR of 12.6%. Logwin's operating margins have improved from 2.2% in 2014 to an expected 5.7% in 2024, while maintaining high-teen to low-twenties ROIC. With a market cap of €668.0M and an enterprise value of €355.7M, the stock appears undervalued, trading at 10.4x P/E, 4.3x EV/EBIT, and 4.4x EV/FCF. The company offers a 5.8% dividend yield. Despite minimal investor communication beyond annual reports, Logwin's strong financials, high insider ownership, and limited analyst coverage present an interesting investment opportunity for deeper investigation.

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Equinix (EQIX) is positioned as a short opportunity with a $673 price target, representing a 21% downside. The company faces challenges including a slowdown in AI data center capex, decelerating business momentum, competition from hyperscalers, weak financials, and questionable accounting practices. Utilization rates have fallen to 78%, while cabinet growth is stagnant at 1.2%. Free cash flow has dropped 73% since 2022, and the company relies heavily on debt and share issuance to fund operations. Equinix's accounting practices appear to understate maintenance capex, potentially inflating Adjusted Funds From Operations (AFFO). The stock trades at a premium valuation of 26x P/AFFO, which is unjustified given its modest growth projections and operational issues. Additional risks include minimal insider ownership and ongoing litigation alleging securities fraud. Catalysts for the short thesis include continued slowdown in AI data center capex, intensifying litigation, changing investor perception, and potential regulatory scrutiny of financials.

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